Budgeting for the Holidays

Fall is here, the time where our collective attention usually shifts to the holidays. Whether it’s making travel accommodations, planning for parties, or shopping for gifts, October usually marks the start of a holiday marathon that doesn’t end until New Year’s Day. 

This year, we have bigger issues on our plate. 

With COVID-19 and the November election dominating almost everybody’s attention, it’s entirely possible that you haven’t started budgeting for the holidays. It’s also possible that this year, you have a lot less money to budget. That’s why we’ve put together some tips to help you get through the rest of the year in one piece. 

Talk about the Holidays Beforehand  

If you’ve never had to discuss your gift plan before, now is a perfect time to start. Financial insecurity is more common than ever before, and other people are likely in the same boat. 

#RealMoneyTalk: talk to the people you always exchange gifts with and ask how they’d feel about minimizing presents. Like any financial conversation, this may be awkward and embarrassing. According to a 2019 survey commissioned by the Intuit consumer group (makers of Mint and TurboTax) and conducted online by The Harris Poll, 51% of respondents choose to not talk about money with their friends or family.

Look at this way – The person you’re speaking to might be furloughed or dealing with an unexpected home repair. Giving them the option of spending less on the holidays may be the best gift you could give them.  

You can also minimize gifts by having a secret Santa gift exchange instead of buying presents for everyone. This still maintains the fun of gift-giving without the financial pressure of buying gifts for everyone. Or you could encourage people to only buy presents for the children in the family and skip the adults. 

Create a Budget  

Go through your budget, bank statements, and credit card accounts to see how much extra you have to spend on the holidays. Don’t take money from your emergency fund or Health Savings Account, but it’s ok to use funds that you’ve allotted for 2020 travel since you’re probably not going anywhere. 

Then, go through last year’s credit card and bank statements to determine how much you normally spend on the holidays. Most people will underestimate that figure, so it’s best to get the actual numbers. Compare how much you have to spend on the holidays and how much you spent last year to see if there’s a discrepancy. 

Finally, decide how much you’re comfortable spending this year. You may want to divert more money to your emergency funds. Again, don’t feel bad if you cut back this year.

Feel Empowered to Spend Less 

With all of the unknowns this year has brought and next year has yet to reveal, this year is a great time to refocus your holiday traditions. Know you’re making the best decision for yourself and your family by focusing more on thoughtful gift-giving and less on extravagant, showy presents.

Those thinking of splurging on Christmas presents might want to consider restraining themselves, especially if their companies are planning layoffs. Not to paint a grim picture, but according to data from the Bureau of Labor Statistics, January has the most amount of layoffs. If you lose your job, you’ll definitely be glad you spent less money on presents. 

Don’t worry about hurting people’s feelings if you buy fewer presents or skip gifts entirely. No one knows how long a recession will last, and it’s better to have more money in your emergency fund than a Christmas tree with a huge stack of gifts. 

Find Ways to Earn Extra Money 

If you still want to give some presents for the holidays and don’t have the extra funds, it may be time to earn more money.  

Due to the pandemic, services like Instacart, Shipt, Postmates, and Uber Eats are hiring new drivers. Some have new driver incentive programs that pay an extra bonus when you complete a certain amount of deliveries. 

Tell people you know that you’re trying to earn extra money for the holidays, because they may know of other opportunities. If you’re handy, post about your skills in a neighborhood Facebook group or on NextDoor.  

Many traditional retail and service businesses also hire extra workers around the holidays and have a quick onboarding process. You’ll likely be paid slightly above minimum wage. 

Open a Separate Bank Account

When saving for a short-term goal, it’s best to keep the money in a separate account. This makes it easier to track how much you have. 

One way to create a separate account and earn extra money at the same time is to find a bank with a sign-up bonus. Many banks offer bonuses to new customers when they open an account and transfer a certain amount of money or set up a direct deposit.  

These bonuses range from $100 to $400. If you open one of these accounts now, you should have the bonus in time for Christmas or shortly after. 

Look for Coupons 

When you’re buying gifts, try to take advantage of every possible way to save money. Installing browser extensions can help you find the best deal.  

Honey is a browser extension that notifies you of possible coupon codes. Just click on the browser extension when you’re checking out, and Honey will apply any relevant codes. When you find an item you want to buy as a gift, add it to your Honey Droplist to be notified if it goes on sale.  

The Wikibuy extension also provides coupon codes and can show you if the Amazon item you’re looking at is available for less on a different site.  

Many online retailers offer discounts when you join their email list. This is another easy way to save on presents. If you try to join and discover you’ve already used the email code, try creating a new email address just for this purpose.

Shop Smart

Doing research before you buy an item will ensure that you’re getting the best bang for your buck. Sites like Wirecutter, CNET, and Consumer Reports review products and share their top picks.  

Look on these sites before buying anything. Many will include budget-friendly recommendations, allowing you to save money without sacrificing quality. 

Reddit is also full of threads discussing the best products in different categories, whether it’s a kitchen knife or a beauty mask. If you can’t find a thread about what you’re looking for, create a post on the most relevant forum to see what people have to say. You can also include what you’re willing to spend so people only share items that fit your budget.